The original complaint charges that defendants, the Sprint Corporation ("Sprint" or the "Company"), Ernst & Young LLP ("Ernst & Young"), and some officers of the company violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market between February 1, 2001 and February 5, 2003. Specifically, that press releases, SEC filings and disclosures distributed by the Company during calendar years 2001 and 2002, were each materially false and misleading because they failed to disclose that Sprint, with the help of Ernst & Young, had improperly avoided substantial tax liabilities as a result of its employees exercising numerous stock options.
On May 23, 2003, the Court entered the Practice and Procedure Order Number 1, granting the motion to consolidate the cases and approving lead plaintiff and lead counsel. On September 2, 2003, the plaintiff filed a First Amended Consolidated Class Action Complaint against all defendants. The defendants filed motions to dismiss. On April 23, 2004, the Court entered the Order signed by U.S. District Judge John W. Lungstrum granting in part and denying in part the defendants’ motion to dismiss and granting the defendant Ernst & Young LLP’s motion to dismiss. The plaintiff's complaint was dismissed in its entirety as to defendant Ernst & Young. On May 21, 2004, the plaintiff filed a Second Amended Consolidated Class Action Complaint, and the defendants responded by filing a motion to dismiss on June 21, 2004.
On September 3, 2004, Judge John W. Lungstrum granted in part and denied in part the motion to dismiss the Second Amended Consolidated Class Action Complaint. The parties have since engaged in discovery proceedings. On October 2007, the defendants filed two Motions for Judgment on the Pleadings, which were denied by the Court Order entered on January 23, 2008. On June 18, 2010, certain defendants filed two motions for summary judgment.
According to the Company's Form 10-K, for the fiscal year ended December 31, 2010, in December 2010, the U.S. District Court for the District of Kansas granted summary judgment in favor of Sprint and the other defendants, in a class action lawsuit filed in 2003, which alleged that our 2001 and 2002 proxy statements were false and misleading in violation of federal securities laws to the extent they described new employment agreements with certain senior executives without disclosing that, according to the allegations, replacement of those executives was inevitable. No appeal was taken from that decision, and the case is now closed.